Ithaca Energy Inc.

Ithaca Energy Inc.

July 07, 2010 16:02 ET

Ithaca Energy Inc. Announces C$158 Million Financing by Way of Bought Deal and Concurrent Private Placement

LONDON, UNITED KINGDOM and CALGARY, CANADA--(Marketwire - July 7, 2010) -


Ithaca Energy Inc. ("Ithaca" or the Company") (TSX VENTURE:IAE)(AIM:IAE), is pleased to announce that it has entered into an agreement with a syndicate of underwriters led by CIBC (collectively, the "Underwriters") pursuant to which the Underwriters have agreed to purchase on a "bought deal" basis 47.6 million common shares ("Common Shares") of Ithaca at a price of C$1.70 per common share for aggregate gross proceeds of C$81 million (the "Bought Deal Offering").

Ithaca has also engaged CIBC and Cenkos Securities plc (collectively, the "Placing Agents") as placing agents and joint bookrunners to sell on a reasonable endeavours basis to purchasers resident in the United Kingdom, 45.1 million common shares of Ithaca at a price of £1.07 per common share (approximately equivalent to C$1.70 per common share) for aggregate gross proceeds of approximately C$77 million (the "Private Placement").

The combination of the proceeds from the Bought Deal Offering and Private Placement ("the Proceeds") (in total, approximately US$150 million (gross)), together with debt made available from the recently announced Bank of Scotland facility and anticipated cash flows, means that all of the Company's current projects are anticipated to be fully funded through to first production.

The Proceeds are intended to be used to accelerate the development of the enlarged Greater Stella Area (the "GSA"), which includes the Stella, Harrier and Hurricane discoveries, and for general corporate purposes. Management believes the Stella appraisal well has reduced the development risks associated with the GSA.

The GSA has now become a focus for the Company to accelerate return on investment through co-development of the discoveries. Central to the project is the joint development of the Stella and Harrier fields. The Company expects operational development synergies to allow the Company to benefit from contracted services and supply markets with lower costs.

The GSA accounts for over 70% of the Company's proved plus probable reserves on a barrel of oil equivalent basis based on the latest reserves report (as at April 30, 2010) prepared by Sproule International Limited. Detailed planning for the Stella area has already been launched and a formal dialogue with the authorities (DECC) and host off-take infrastructure owners is ongoing to accelerate and optimise the development.

The Company plans to develop the larger Stella discovery with a greater biased towards light oil and liquids recovery. The expected development plan includes 4 oil producing wells and 1 gas producing well for the Stella discovery and 2 gas producing wells for the Harrier discovery. The Company currently anticipates total net capital expenditures required to develop Stella to be approximately US$288.8 million and to develop Harrier to be approximately US$78.95 million. The net proceeds from the Bought Deal and the Private Placement together with debt and anticipated cash flows are expected to fully fund the development of the GSA.

Pursuant to the Bought Deal Offering, the Common Shares will be offered in all provinces of Canada (except Quebec) by way of a short form prospectus and by way of private placement in the United States pursuant to exemptions from the registration requirements pursuant to Rule 144A of the United States Securities Act of 1933. The Common Shares have not been registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States unless an exemption from registration is available. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States.

Closing of the Bought Deal Offering and Private Placement and, accordingly dealings in the new Common Shares, is expected to occur concurrently on or about July 28, 2010. The Bought Deal is subject to certain conditions including, but not limited to, the concurrent closing of the Private Placement. The Private Placement is subject to certain conditions including, but not limited to, the concurrent closing of the Bought Deal and certain other conditions customary in the United Kingdom including favourable market conditions. The Bought Deal and the Private Placement are also subject to other customary conditions including the receipt of all necessary approvals including the approval of the TSX Venture Exchange.

In accordance with AIM Guidelines, Lawrie Payne, MA Marine Geology (Alberta & Columbia) and Chairman of Ithaca is the qualified person that has reviewed the technical information contained in this press release.

Reader Advisory

This news release contains certain forward-looking statements, which include assumptions with respect to (i) completion of the Bought Deal Offering; (ii) completion of the Private Placement; (iii) use of proceeds; (iv) reserves estimates with respect to the GSA; (v) availability of equipment, qualified personnel and other key inputs required to carry out operations in the manner and in accordance with the timelines currently contemplated; and (vi) availability of adequate funding for current and future operations. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Ithaca's control. Such risks and uncertainties include, without limitation, risks associated with oil and natural gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in the UK, Canada, the United States and globally, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Ithaca's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits, including the amount of proceeds, Ithaca will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Ithaca or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Ithaca does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

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